Easterlin-Paradox

The Easterlin Paradox is a theory on the relationship between income and happiness. It was founded in 1974 by the economist Richard Easterlin in a paper entitled Does Economic Growth Improve the Human Lot? published.

Easterlin's thesis

Easterlin examined 30 surveys from 19 countries from between 1946 and 1970. He watched in international comparisons a weaker relation between subjective happiness and income than with intra-national comparisons. He also noted based on intertemporal study that Americans have become no happier in the period studied, despite increases in income. Easterlin cited as a possible explanation is that relative income is a better predictor of subjective satisfaction was as absolute income. He repeated his study in the following decades several times and each came to the same conclusion.

A common interpretation of these results is: "If basic needs are satisfied, not more wealth leads to more happiness. "

Reception, criticism and further research

The economist Andrew Oswald 1997 published an analysis of income and surveys on subjective life satisfaction. He noted that income growth in the U.S. and Europe has increased the subjective life satisfaction, but it only had a small effect.

Economist Michael Hagerty and the sociologist Ruut Veenhoven 2003 published a paper in which they present to the Easterlin Paradox contradictory analyzes. They used more recent data and found that people in countries with rising incomes would happier. In a reaction Easterlin accused the authors to have used inadequate data.

Economists Justin Wolfers and Betsey Stevenson published in 2008 a paper in which they question the Easterlin paradox. They analyzed all data on happiness and income in comparisons between rich and poor. Within a society, in comparisons between rich and poor countries, and in intertemporal comparisons It was found that the relationship between subjective happiness and income for intra-national, international and intertemporal comparisons is very similar. These results contradict those Easterlin, whose paradox is based on the assumption that intra-national comparisons would mean greater happiness differences as an international, or relative income is more important for satisfaction than absolute income. In countries such as Japan or Europe the subjective satisfaction grew along with the average per capita income. Also, the increase of happiness was greater when income growth was greater.

Easterlin 2010 presented a new study, in which he sees confirmed his thesis. With a team he had examined the development in 37 countries over a period of approximately 22 years, while for the first time also included developing countries and Eastern European countries in transition to a market economy.

Another approach to the solution of the paradox are adaptation - level theories to which an individual by strong positive or negative life events returns an individual " happiness - zero " (see also hedonistic treadmill ). According to Easterlin the theories of Hedonistic Treadmill apply to monetary goods less than on non-monetary items, which he sees himself confirmed in his paradox.